It’s important advisers are able to spot and manage vulnerable clients, but you may be surprised by what the Financial Conduct Authority (FCA) considers as a potentially vulnerable customer. Failing to do so could result in reputation damage and complaints.
In its 'Occasional Paper No 8', the FCA made clear that a firm's vulnerability strategy and policy need to be robust, reflective of the modern view and embedded into everyday practice.
Many of us will experience vulnerability at some point but people in such situations often don't recognise themselves as being so. Factors can include:
- Low literacy skills.
- Physical disability.
- Mental health problems.
- Low income and/or debt.
- Caring for someone else.
- Being older old.
- Being young suggesting a lack of financial experience.
- Divorced / bereaved / job loss.
- Low language skills if English is not their first language.
How advisers can help
- Produce documentation that’s clear and easy to understand.
- Communicate in a way that suits the client such as at a different method, time and or place (not just looking at braille).
- Avoid framing products in certain ways to affect a choice. Ensure all options are fully explained.
- Help the client feel valued and reassured by actively listening to them and providing an individual, tailored response.
- Offer longer appointments so the client has time to think about your advice and digest it.
- Listen, be helpful and flexible.
- Be proactive with a client recognised as vulnerable.
Advisers need to consider